EU adds 15 people, 18 firms to sanctions list over Ukraine crisis

A front of the atrium of the European Union Council Building (AFP Photo) / AFP

The European Commission added new names and companies to its blacklist on Thursday over the Ukrainian crisis, according to diplomats. However, 'stage three' economic sanctions against Russia have again fallen flat.

The diplomats who spoke
to Reuters did not specify the names of the people and companies
on the extended sanctions list, and said they would resume
discussions on Friday morning.

It’s a further delay of
sectoral, or economic, sanctions against Russia after EU foreign
policy chief Catherine Ashtonannouncedon Tuesday the EU would outline
tougher sanctions to hit Moscow on Thursday,if it failed to comply with the
Malaysian Air Flight 17 crash investigation.

The new proposed sanctions included a ban on Russian capital
markets, sanctions against Russia’s weapons industry and
'sensitive
technologies', which would include Russia's critical energy
sector, the Financial Times (FT)reports.

EU officials are
considering sanctions that would bar Russia from using European
lending institutions and, conversely, ban Europeans from buying
new debt from Russia’s largest banks, many of which are
state-controlled.

“Restricting access to capital markets for Russian
state-owned financial institutions would increase their cost of
raising funds and constrain their ability to finance the Russian
economy,” a 10-page memo presented to the European
Commission, said, as reported by Bloomberg News. The memo was sent to all 28
EU ambassadors prior to Thursday’s meeting.

If adopted, EU sanctions would apply to all Russian banks that
are more than 50 percent state-owned. Sberbank, VTB, the
country’s two largest lenders, as well as Vnesheconombank, and
Gazprombank (already sanctioned by the US) would fall into this category.

“It would also foster a climate of market uncertainty that is
likely to affect the business environment in Russia and
accelerate capital outflows,” the document said.

According to the memo, €7.5 billion of €15.8 billion of bonds
issued by Russian public financial institutions were sourced from
EU markets, FT says.

Blocking European clients from Russian markets would exacerbate
capital flows out of the country, which in 2014, have already
reached $80 billion, and could prove to be a crippling drain on
the economy, which isn’t expected to grow more than 1 percent
this year.

The US has been pushing
the EU to step up sanctions against Russia, but European
countries have muchmore to
losein cutting ties
with Russia than their Western allies.

Europe’s biggest
economic heavyweights- Germany, France, and Italy- have
significant investment and trade ties with Russia. For example,
one in every four foreign German companies operates in
Russia.

About a quarter of European countries completely rely on Russia
for gas or oil supplies.

Many also doubt the practicality of economic sanctions, which so
far have had little effect on the Russian economy, and haven’t
changed the course of events in Ukraine.